Yuhn, Ky-Hyang

This thesis investigates the direction of causality as well as short-run dynamics and long-run equilibrium relationship between stock prices and exchange rates using quarterly data for the period 1960:1--2004:4. The studies apply techniques of the unit root, cointegration and Standard Granger causality tests to examine the relationship between these two financial variables. The empirical results reveal that there is no causal linkage and no cointegration between the stock prices and exchange rates as suggested under Traditional and Portfolio approaches. The results support the view that the semi-strong form of EMH holds true for the U.S. financial markets.

The recent advances in communication technology are changing the structure of the labor market in the United States. Jobs, which previously had to be done in the United States, can now be done offshore and thus American companies can take advantage of the wage differentials between countries. To see the potential effects that such a structural change may have on economic growth, we first examine the 19th century convergence between Europe and the New World countries. Thereafter we introduce a model of economic growth that will take into account a particular aspect of present day offshoring. Many of the workers being brought into the United States labor market are highly skilled. After this, we introduce Skill-Biased Technological Change and look at how it may be affected by offshoring.